Jul 21 2010
Why Would A Lender Carry Out A Short Sale?
Welcome to shortsaleshift.com. Minnesota’s foremost short sale agents, Josh Pomerleau and Sarah Willman are going to talk about why a bank would choose to complete a short sale.
One of the first comments we get from home owners that are going through foreclosure or starting to miss their payments is “Why would a lender choose to do a short sale?”. Often times the home owners think that it just sounds to good to be true. But, there are lots of reasons why a bank would prefer a short sale over foreclosure. At the end of the day, it saves the bank tons more cash to go through a short sale than to progress through a foreclosure.
There are lots of negative expenses connected with foreclosing on a property. There are lawyer fees. Lots of times the property owner will leave the property. When that occurs, the lender has to worry about people breaking into the house and stealing stuff. In addition, the general maintainence of the house is ignored. There are also cases where home owners will damage their home because they are upset with the lender taking their home from them.
The bank looks at it like this. It is much less probable that the property will be damaged when they close a short sale. It gives the home owner a feeling of closure by not losing their property. Then the house owner can move on under their own control.
Moreover, the lender will have to insure the house from all types of scenarios such as tornados and additional natural disasters. Those costs are also negative to the lender.
At the end of the day that is why the bank would want to complete a short sale. The lender also wants to close on the house quicker than they could with a foreclosure. Getting that money from a short sale allows them to turn around and loan that money out again. So, the time value of money is worth quite a bit to the bank.
Through the short sale route, statistics show that the lender will obtain more money from a short sale than they will from a foreclosure.
Get more help from short sale Realtors, Josh and Sarah, at Short Sale Shift presented by the Short Sale Specialists of Minnesota
